Arizona Attorney General Kris Mayes filed criminal charges against prediction markets platform Kalshi, accusing it of operating an illegal gambling operation in the state without a license and taking election bets.
The 20-count complaint filed Tuesday in Maricopa County court alleges the site “accepted bets from Arizona residents on a variety of events,” including state elections, which are illegal in Arizona, and accuses the company of engaging in unlicensed gambling activity. The complaint charges Kalsi with four counts of election gambling for allegedly accepting bets from Arizona residents on the 2028 presidential election, the 2026 Arizona gubernatorial election, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona Secretary of State election.
According to AZ Mirror, this is the first time the state has brought such charges against the company and marks a significant escalation in the fight between the state and the prediction markets industry.
“Khalsi may brand itself as a ‘prediction market,’ but in reality it is operating an illegal gambling operation and betting on Arizona elections,” Attorney General Mays said in a statement. “No company can decide for itself which laws to follow.”
It’s worth noting that the charge is technically a misdemeanor. They followed a small spike in state cease-and-desist letters, lawsuits and other official actions against Kalshi’s activities, with many officials complaining that the company was evading state gambling laws.
In contrast, prediction sites like Kalshi argued that they do not violate state law because they are federally regulated through the Commodity Futures Trading Commission.
Kalshi may be attacked left, right and center, but the company has often taken proactive legal action as well.
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Kalshi sued the Arizona Gaming Department in federal court on March 12. The company’s lawsuit argued that Arizona’s regulatory attempts were infringing on “the federal government’s exclusive authority to regulate derivatives trading on exchanges.” Kalshi also recently sued Iowa and Utah for similar reasons.
Mayes’ office claims the company is simply trying to avoid responsibility.
“Kalshi has a habit of filing lawsuits against states rather than following the law. In the past three weeks, the company has filed lawsuits against Iowa, Utah, and now Arizona,” Mayes said in a statement. “Instead of working within the legal framework established by states like Arizona, Kalshi is rushing to federal court to avoid accountability.”
Elisabeth Diana, Kalshi’s communications director, said the Arizona criminal charges were “seriously flawed” and a matter of “gamesmanship” related to the lawsuit the company filed against the state.
“These charges were filed four days after Mr. Kalsi filed his lawsuit in federal court to circumvent the federal courts and disrupt the normal judicial process,” Diana said. “They are attempting to prevent federal courts from evaluating the case on its merits – whether Kalshi falls under exclusive federal jurisdiction. These charges are without merit and we look forward to fighting them in court.”
Federal officials have signaled they are siding with the forecasting industry and preparing for a potential regulatory showdown between state and federal officials. Michael Selig, chairman of the Commodity Futures Trading Commission, recently published an op-ed in the Wall Street Journal accusing the state of staging a “legal attack on the CFTC’s regulatory authority.” Selig also argued that his agency “will not stand by and watch overzealous state governments” while undermining the agency’s “exclusive jurisdiction” over the industry.
